1:3 Internship Policy Malaysia (2026) – Is It Mandatory for Employers Hiring Expatriates?
Malaysia’s 1:3 Internship Policy, officially known as the Progressive Policy on Expatriate Contribution to Local Talent Development, has moved into full implementation from 1 June 2026.
The policy links the hiring of expatriates under an Employment Pass (EP) with the development of local talent. Companies receiving new or renewed Employment Pass endorsements may be required to provide internship or work-based learning opportunities for Malaysian students.
This raises an important question for employers:
Is the 1:3 Internship Policy mandatory?
The short answer is yes. For companies that fall within the scope of the policy and have been officially notified by TalentCorp.
According to TalentCorp’s updated 2026 FAQ, the policy is mandatory for companies within the applicable implementation scope once they have been officially notified and become subject to the policy requirements.
However, this does not necessarily mean that every company hiring an expatriate must automatically hire three interns. The actual requirement depends on the Employment Pass category, the internship quota assigned to the company, and whether the company qualifies for an exemption or successful appeal.
What Is the 1:3 Internship Policy?
The policy is an initiative of the Ministry of Human Resources (KESUMA) implemented through Talent Corporation Malaysia Berhad (TalentCorp).
Its objective is to link expatriate employment with local talent development by requiring affected companies to provide structured and paid internship opportunities to Malaysian students.
The policy completed its pilot phase on 31 May 2026, with full implementation commencing on 1 June 2026.
Importantly, although it is commonly called the “1:3 Internship Policy”, the required ratio is not always three interns for every expatriate.
How Many Interns Are Required?
Under the full implementation framework, the internship requirement depends on the category of Employment Pass endorsed:
| Employment Pass | Internship Ratio | Requirement |
|---|---|---|
| Employment Pass Category I (EP I) | 1:3 | 3 internship placements per EP |
| Employment Pass Category II (EP II) | 1:2 | 2 internship placements per EP |
| Employment Pass Category III (EP III) | 1:1 | 1 internship placement per EP |
Therefore, a company receiving one EP Category I endorsement would generally be assigned three internship placements, while an EP Category II endorsement would generally result in two placements.
The policy applies to both new and renewal Employment Pass applications under EP Categories I, II and III.
Which Companies Are Affected?
According to TalentCorp’s updated FAQ, the policy covers companies receiving endorsed expatriate Employment Pass approvals through:
- Malaysia Expatriate Services Centre (MYXpats)
- Malaysia Digital Economy Corporation (MDEC)
- Malaysian Investment Development Authority (MIDA)
- Iskandar Regional Development Authority (IRDA)
Companies falling within the policy will receive an official notification from TalentCorp confirming their inclusion. Once notified, the company is required to register on the MyNext platform and appoint an Internship Person-in-Charge (PIC) within 30 days as part of the onboarding process.
When Must the Company Hire the Interns?
The requirement does not mean that the interns must already be employed before the company can obtain its Employment Pass.
In fact, the internship requirement takes effect after the Employment Pass approval process has been completed. TalentCorp states that the policy does not change the existing duration or approval requirements of the EP process.
After an EP is endorsed, TalentCorp will notify the company of its internship quota.
The company then has 12 months from the date of TalentCorp’s official notification to fulfil the internship requirement. The assigned quota can also be monitored through the company’s MyNext dashboard.
Example
Suppose ABC Sdn Bhd receives endorsements for:
2 × EP Category I
The normal internship requirement would be:
2 expatriates × 3 interns = 6 internship placements
The company would then have 12 months from TalentCorp’s official notification to fulfil the assigned internship requirement.
What Qualifies as an Internship?
Simply hiring any short-term intern may not be sufficient.
Internship placements recognised under the policy are expected to meet the requirements of the National Structured Internship Programme (MySIP).
The internship should generally be:
Structured and quality-assured, with a minimum duration of 10 weeks, and interns must receive a minimum monthly allowance of RM500 or RM600, depending on their level of study.
TalentCorp also states that internship placements can be in any suitable field. The intern does not have to report directly to the expatriate or perform work related to the expatriate’s position.
This gives employers considerably more flexibility when planning internship placements.
For example, a company hiring a foreign Technical Director does not necessarily have to place all the required interns in the technical department. Suitable internship opportunities could potentially be offered in other functions within the organisation.
Must Employers Register with MyNext and MySIP?
There is an important distinction here.
MyNext registration is mandatory for companies subject to the policy in order to fulfil and track their internship placement requirements.
However, according to TalentCorp’s updated April 2026 FAQ, claiming under MySIP is optional.
Employers can recruit interns through MyNext or directly through universities, institutions or other recruitment channels. Where interns are recruited directly, their details must still be declared through MySIP Direct Hiring on MyNext.
Companies participating in MySIP may also be eligible for a double tax deduction on qualifying internship-related expenses, subject to the applicable requirements.
Are There Exemptions?
Yes. Certain companies may qualify for exemption or special consideration.
TalentCorp’s 2026 FAQ identifies circumstances including:
New companies operating in Malaysia for less than two years; Representative Office or Regional Office (RE/RO) entities; and companies receiving qualifying government tax incentives or exemptions in specified sectors.
The FAQ further specifies exemptions for companies with Pioneer Status (PS) and Investment Tax Allowance (ITA) during the first five years, while the exemption for qualifying Malaysia Digital companies is limited to the first two years. Other exemption requests may also be considered by the relevant committee.
Employers should therefore check their individual status rather than assuming that an exemption automatically applies.
What About the 2% of Workforce Option?
Some employers may have heard that their internship requirement can be capped or calculated based on 2% of the company’s total workforce.
This requires some clarification following the 2026 implementation changes.
From 1 June 2026, the 2% workforce method is no longer a default option. The default requirement is based on the applicable internship ratio linked to endorsed Employment Passes.
A company that wishes to have its requirement assessed based on 2% of its total workforce must submit an appeal through MyNext.
The appeal will then be considered by the policy secretariat based on the applicable criteria and supporting information submitted by the company. Approval is therefore not automatic.
Will Non-Compliance Affect Future Employment Pass Applications?
Potentially, yes.
TalentCorp states that a company’s fulfilment of the 1:3 Internship Policy will be taken into account, with appropriate weightage, when future Employment Pass applications are assessed, subject to the relevant approving authority’s guidelines.
This makes the policy particularly relevant for companies that regularly employ expatriates or expect to submit future EP applications.
Employers should therefore treat the internship quota as part of their ongoing expatriate workforce planning rather than only dealing with it when the next EP renewal is due.
What Should Employers Do After an EP Is Approved?
Once an expatriate EP has been endorsed, employers should check whether they have received a notification from TalentCorp and review the internship quota shown in MyNext.
In practical terms, employers should:
- Check the TalentCorp notification and assigned internship quota.
- Register or activate the company’s MyNext account.
- Appoint an Internship PIC within the required timeframe.
- Determine the number of internship placements required based on the EP category.
- Plan structured internship positions of at least 10 weeks.
- Ensure the applicable minimum internship allowance is provided.
- Advertise the placements through MyNext or declare directly recruited interns through MySIP Direct Hiring.
- Complete the required placements within 12 months of TalentCorp’s official notification.
- Consider whether the company qualifies for an exemption or whether an appeal based on 2% of total workforce would be appropriate.
- Maintain proper records of internship placements for future EP applications and compliance purposes.
Frequently Asked Questions
Is the 1:3 Internship Policy mandatory in Malaysia in 2026?
Yes. From 1 June 2026, the policy is mandatory for companies falling within its implementation scope once they have been officially notified by TalentCorp.
Does one expatriate always mean three interns?
No. The ratio depends on the Employment Pass category:
EP I – 1:3
EP II – 1:2
EP III – 1:1
Does the policy apply to EP renewals?
Yes. The policy covers both new and renewal applications for EP Categories I, II and III.
Must the interns work under the expatriate?
No. Interns may be placed in other suitable functions or fields within the company and do not need to report directly to the expatriate.
How long does the company have to hire the interns?
Companies generally have 12 months from TalentCorp’s official notification to fulfil their assigned internship quota.
Is the 2% workforce calculation automatic?
No. From 1 June 2026, it is no longer a default calculation method. Companies wishing to be assessed based on 2% of their workforce must submit an appeal through MyNext, which is subject to review and approval.
Does the internship requirement delay the Employment Pass approval?
According to TalentCorp, no. The policy takes effect after completion of the EP approval process and does not change the existing EP approval duration or requirements.
Conclusion
The 1:3 Internship Policy represents an important change for Malaysian employers hiring expatriates in 2026.
From 1 June 2026, companies within the applicable scope that receive new or renewed Employment Pass endorsements may be assigned internship obligations ranging from one to three local internship placements for each EP, depending on the Employment Pass category.
While the policy is mandatory for companies officially brought within its scope, employers should not simply assume that every expatriate automatically means three interns. The actual requirement should be checked against the TalentCorp notification and MyNext internship quota, while eligible companies may also explore available exemptions or submit an appeal where appropriate.
For companies planning to hire or renew expatriate Employment Passes, it is advisable to include the internship requirement as part of the company’s expatriate workforce and HR planning from the beginning.
Need assistance with expatriate Employment Pass applications in Malaysia?
CentralHR provides support for Employment Pass (EP), Professional Visit Pass (PVP) and other expatriate employment-related applications, helping employers understand the application requirements, documentation and ongoing compliance obligations.
Contact CentralHR to discuss your expatriate hiring requirements.
Disclaimer: This article is intended for general information only and is based on the policy information available as at September 2026. Requirements, exemptions and implementation procedures may be updated by the relevant authorities from time to time. Employers should refer to the latest official guidance from TalentCorp and the relevant Employment Pass approving authority for their specific circumstances.
